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The Ominous Message In All Those Bags Of Cash


"Too much money" (Cover Story, July 11) underscores the contradictory situation of low growth, excessive savings, and low interest rates affecting the leading countries of the world. Could you imagine the state of the U.S. economy without this [current-account] deficit partially offsetting excessive U.S. savings?

Economists trained in the 1960s and '70s under Keynesian macroeconomics perhaps more easily recognize the historic dangers that excessive savings represent: These are a reflection of an unbalanced capitalist system, generally a precursor to recession, and can only be addressed through the collective actions of governments. Keynes elaborated the causes of the Roaring Twenties and the disastrous Great Depression of the '30s: Too much wealth and income in the hands of too few people, excessive levels of private investment, and a reduced government sector eventually lead to hard times for all.

Unfortunately, the recent conference of the leaders of the Group of Eight demonstrated once again the inability of the world's wealthy nations to deal with the true underlying unbalanced economies, just as they were unable to do so in the 1920s and '30s. You were correct to alert your readers to "hold onto your hats."

John Reeder

Arlington, Va.

To what purposes can the managements of our publicly traded corporations be hoarding money? Despite liberalized tax treatment, dividends are still so low as to be insulting. There are no more widow-and-orphan stocks, and we are all afloat in the risk pool. A pile of cash for mergers and acquisitions might make sense, but M&A adds no wealth to our national coffers, though it admittedly may make business more "efficient" (a euphemism for putting people out of work). A third alternative, buying back a corporation's own shares, is considered the sure sign of the total lack of managerial imagination.

So why do we keep reading about pensioners cut off from benefits by corporations that walk away from contractual obligations? And why do so many U.S. megacorporations want government subsidies or protection to compete in the global economy? A lot of us can think of better uses for our cash than management awarding themselves obscene bonuses. Give us a shot at our own dough. Show us the money!

Perry Glasser

Haverhill, Mass.

Economist Gunnar Myrdal wrote that the world would grow toward peace through international investments and trade. The interlocking of world economies would make war unthinkable. Perhaps this glut of capital might become a peace dividend if it results in increased international investments. One reason China hesitates in taking action against Taiwan is the huge economic impact. China's interest in Unocal (UCL) may be one more opportunity to increase the ties between U.S. and China that build toward peace. I hope this article will be followed by more discussions of the flooded market and new world economic possibilities.

Richard Harem

Marfa, Tex.

We are experiencing technologically driven "simulflation," a situation similar to that of the 1920s, where technological innovation continuously accelerated the decline of investment needed to generate huge technological advances and cost reductions. Now the Internet, etc., collapses trade/commerce barriers and destroys pricing power -- resulting in demand for lower labor costs, the marginally highest component of business costs. Since currency has been decoupled from commodity constraints (gold), governments have no limit on how much money they can print. So there is huge inflation in money creation, said money being driven to invest in assets.

If intellectual-property rights were respected globally, there would be no trade deficit. But there is no way just yet in a digital world to protect such rights. Perhaps a key way to fix things is to impute the loss to information processing-based economies on a country basis -- as a tax on top of transactions aside from Treasury purchases. This would be an "IP recapture tax," for instance on the purchase of Unocal.

David Gobel

Lorton, Va.

Re "The rich boys" (Investigative Report, July 18), as we made clear to you, Marc Rich does not have and never has had any financial interest in Trafigura. One of the reasons we set up an independent operation was a fundamental difference in business ethics and practice.

We also strongly refute the implications of impropriety in your report. We operate to the highest possible standards, do not contravene international law, and distance ourselves from corruption of any kind. We are confident that U.N. investigations will conclude that we are the innocent party in the Ibex incident.

Graham Sharp

Director

Trafigura Beheer

London

"Is there plenty of oil?" (News Analysis & Commentary, July 11). Let's hope so. Two lessons should come out of this article: First, having picked the low fruit, getting oil from oil sands or injecting wells with CO2 will be quite expensive. Second, the cheapest oil is the oil we get from efficiency. There are huge gains in efficiency possible with today's technology at modest costs. Virtually every industry should be investing in efficiency because it is a good investment!

Karl Nurse

St. Petersburg, Fla.

I read with mixed feelings your article, which says: "Even legendary oilman T. Boone Pickens is predicting $3-a-gallon gasoline within a year. The national average now: a pricey $2.22." In Hungary gasoline already costs around $5 per gallon, and in some Western European countries it costs even more. I wish I had to pay only a "pricey" $2.22 per gallon!

Csaba Vass

Budapest

I think the real answer to the question "What's driving the box office batty?" (Entertainment, July 11) is armchair analysis that insists on searching for an answer to a problem that probably doesn't exist. Despite the contention that Hollywood is posting "the worst box-office performance in two decades," one doesn't have to go back very far to find a worse year. In total dollars, total ticket sales, and average ticket sales, this year is already ahead of 2001, which was the fourth-best year modern Hollywood has had. We're writing obituaries before we even know if the patient is dead yet.

Ryan Paige

Wylie, Tex.

Editor's note: When the story was written, the box office had recorded 19 consecutive weeks of reduced ticket sales and grosses compared with 2004, which analysts said was the longest losing streak in two decades.

With a wide-screen TV at home and cheaper snacks, why go to the theater?

Robert J. Parish

Jupiter, Fla.


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